Examine the difference in marketing strategy between Nike and Adidas, and how each has retained their position in the market

Examine the difference in marketing strategy between Nike and Adidas, and how each has retained their position in the market

Tess Kennedy (n8852782)

Tutor: Lydia Pearson Due Date: 3rd June

Nike and Adidas are two of the world’s largest sportswear providers and have had a significant impact on the fashion industry. The following essay aims to provide insight into how Nike and Adidas have used marketing strategies as a way to retain their position in the market. This will be done through a comparison of the two companies marketing strategies, including how social media has influenced their success. Further, recommendations are provided for the future success and longevity of both the brands.

Nike is an American multinational company that was founded in 1972 that designs, markets and distributes footwear and apparel (Nike, 2016). By the early 2000’s, Nike had expanded to over 170 countries and had its logo become recognisable throughout the world. Part of Nike’s success is owed to their marketing strategies that have been implemented throughout the years (Encyclopaedia Britannica, 2015).

Figure : Kylie Jenner in Adidas. Sourced from Instagram.com/KylieJenner
On the other hand, Adidas was founded in Germany in 1949 and is a sportswear manufacturing company. The company produces a large range of products including footwear, clothing, accessories and eyewear and consists of 170 subsidiaries. The company is well-known worldwide being one of the largest sportswear providers in the world. Similarly to Nike, part of the brands success is owed to their various marketing strategies employed throughout the years (Adidas, 2016).
Activewear as a fashion trend has been booming over the past few years, allowing people to remain comfortable without compromising their style. With celebrities such a Kylie Jenner, as seen in Figure 1 and 2, wearing active wear as a fashion statement the trend continues to grow. NPD, consumer market research firm reported that activewear sales were growing at a faster rate than all other sectors (Klein, 2014). Sheila Aimett (2014) VP of WGSN stated “It’s really based on the trend towards activewear as daywear and weekend wear, which we’ve seen as a fast growing theme on the runways for the past few seasons.” This boom has affected both Nike and Adidas with an increase in sales and exposure. In 2015, Nikes total revenue reached $30.7 billion making Nike the market leader for active wear (Market Watch, 2016a). Adidas, falling closely behind Adidas reached total revenue of 16.92 billion in 2015 (Market Watch, 2016b).


Figure : Kylie Jenner in Activewear. Sourced from Instagram.com/KylieJenner

As mentioned, Nike and Adidas are the worlds leading companies in regards to activewear due to the implementation of successful marketing strategies (Market Watch 2016). Nike currently leads the market with their corporate level strategy, which focuses on innovation and emphasis on producing footwear, and apparel that reduces injury, maximises comfort, and increases athletic performance. On the other hand the strategy of Adidas includes a focus on innovation, new products, processes and services that compete with their competition (Hussain, Abass and Mazar, 2015).

Price is an integral part of marketing as it impacts profit, supply and demand (Mylonas, 2009). In general, both companies pricing is high with Nike being slightly more expensive. In order to successfully achieve their goals, Adidas uses adaptive pricing strategies, meaning tactics are dependant on the market they are operating in. For example they often implement market-skimming tactics, where they initially charge the highest possible price consumers would be willing to pay for a product and relatively reduce this price as popularity decreases (Hussain, Abass and Mazar, 2015). In order to remain relevant Nike implements a different pricing strategy from Adidas. Until 2013 Nike implemented a cost plus strategy, which involved charging a margin over the manufacturing cost. However, due to the boom in the activewear industry Nike re-evaluated their tactics. Nike now implements a consumer value equation pricing strategy, which is based on the popularity of a product and how much a consumer would be willing to pay (Barrie, 2014).
Place is another integral part of marketing and the placing strategies that both companies have used have affected their success in the industry (Mylonas, 2009). Adidas currently uses a strategy in which they concentrate their products in high populations all around the world whilst offering their products online (Vlasich, 2012). Similarly, Nike also distributes their products worldwide and online. Whilst both companies implement similar placing strategies they’ve both seen substantial growth in sales with a high percentage of these attributed to online sales. Overall the growth of e-commerce in the fashion industry, as well as the companies’ online placing strategies, has resulted in an increase of sales for both brands (Hussain, Abbas and Mazar, 2015).


Figure : Kanye West for Adidas. Sourced from Adidas.com

Both companies have also implemented promotional strategies including celebrity endorsements and the use of traditional and new media. Nike aims to reach a high number of consumers with big impact and continues to use celebrity endorsements in order to appeal to consumers. Nike focuses on partnerships with athletes such as Cristiano Ronaldo and Kobe Bryant in order to motivate consumers to mimic these personalities. However, due to the rise in activewear as fashion Nike have also taken on personalities such as Drake in order to appeal to a wider audience and step away from sporting. Adidas also uses celebrity endorsement as a major form of promotion. Similarly to Nike, Adidas has always used athletes as a form of advertising and have now signed major personality and fashion enthusiast Kanye West (Belzer, 2013).
In addition both companies have used traditional forms of advertising such as television advertisement and magazine spreads in order to promote their brand. Through a range of different campaigns both companies have been able to maintain their position in the market (Gregory, 2015).
With the rise of social media, both Nike and Adidas have integrated social media campaigns into their marketing operations in order to retain their positions in the market. Both companies use social media platforms Facebook, Twitter and Instagram to their advantage, however Nike clearly has a larger following on all platforms. As seen in the table below Nike currently has over 24 million Facebook likes, 54.8 million Twitter followers, and 46.8 million Instagram followers. On the other hand Adidas currently have 23 million Facebook likes, 2.7 million twitter followers and 8.3 million Instagram followers (Meltwater, 2015).

In terms of social media engagement Nike’s followers are more active in conversations online, generating an average of 44,923 conversations daily. Adidas on the other hand, generates approximately 30,225 per day (Repucom, 2015).

Nike have established a range of social media hashtags, including #justdoit and #nikewomen to support there long running campaigns. They have also established hashtags for specific campaigns and promotions, including #airmaxday. In addition Nike have taken it one step further and created their own platform ‘Nike+’. The app allows consumers to monitor their running performance whilst connecting with other runners by giving advice, motivation and participating in challenges (Walker, 2014). By providing their own app they aim to increase consumer loyalty, which will ultimately result in consumers purchasing apparel from Nike and not its competitors (Cashman, 2013).

Figure : Nike Instagram post. Sourced from Instagram.com/Nike
Similarly to Nike, Adidas also implement the use of social media hashtags and their own app ‘Adidas Train and Run’. Adidas use various hashtags that are campaign focused such as #Speedtakes and #Heretocreate. Their app currently focuses on providing consumers with a way to track their workouts and providing support and motivation. Like Nike, by providing their own app they are aiming to increase consumer loyalty in order to increase sales of apparel (Pigott, 2016).
Overall Nike is performing excellently in regards to social media as they are not only providing apparel but are servicing consumers, which keeps them engaged and establishes loyalty. Whilst not receiving the same amount of consumer engagement as Nike, Adidas are still performing exceptionally well in the integration of social media into their marketing strategies.
After analysing the marketing strategies and social media tools of both Nike and Adidas a range of recommendations have been made in order to ensure the brands future success and longevity.
As Nike is already highly successful in terms of their social media marketing it is recommended that they begin to target the untapped market. Whilst Nike is a global company with locations in various parts of the world, a large portion of Asia and Africa is currently untapped. By developing a strategic partnership with a local company, Nike can increase their market share and ultimately profit. By additionally sponsoring local sports events and fashion figures within the area Nike can develop a strong position in these markets. This will enable Nike to continue to grow and enable future success and longevity (Parker, 2014).

Figure 5: Kylie Jenner for Puma. Sourced from Instgram.com/KylieJenner
As seen through the analysis, Adidas need to improve their social media strategy in order to generate the same amount of engagement as the market leader Nike. This can be done through the use of female celebrity endorsement which will also allow Adidas to further tap into the women’s active wear market. Competitor Puma have recently signed both Kylie Jenner and Rihanna as they have the ability to capture headlines in both traditional and new media due to their large following as fashion and urban icons (Butler-Young, 2016). The signing of Kylie Jenner alone generated an increase of sales by 7.3% and growth on all social media platforms (Hardy, 2016). It is recommended Adidas adopt a similar strategy by signing female celebrities who fit the companies branding such as Zendaya and Gigi Hadid.
By implementing these marketing strategies both companies can strengthen and maintain their position in the market as well as assuring future success and longevity.

References

Adidas. 2016. “History.” Accessed May 10, 2016. http://www.adidas- group.com/en/group/history/

Barrie, Leonie. 2014. “New Pricing Strategy Pays off for Nike.” Accessed May 17, 2016. http://www.just-style.com/analysis/new-pricing-strategy-pays-off-for- nike_id122400.aspx
Belzer, Jason. 2013. “Sneaker Wars: Kanye West Signs Deal With Adidas, Drake With Jordan Brand.” Accessed May 17, 2016. http://www.forbes.com/sites/jasonbelzer/2013/12/05/sneaker-wars-kanye- west-signs-deal-with-adidas-drake-with-jordan-brand/#28ebc39b7250
Butler-Young, Sheela. 2016. “How Kylie Jenner and Rihanna are bringing girl power to Puma.” Accessed May 23, 2016. http://footwearnews.com/2016/focus/athletic-outdoor/rihanna-kylie-jenner- puma-womens-market-sneakers-shoes-208949/
Cashman, John. 2013. “How Nike is Killing it in Social Media Marketing.” Accessed May 23, 2016. https://digitalfireflymarketing.com/how-nike-killing-it-social- media-marketing
Encyclopaedia Britannica. 2015. “Nike, Inc.” Accessed May 10, 2016. http://www.britannica.com/topic/Nike-Inc
Hardy, Alyssa. 2016. “Yeezy Who? Kylie Jenner and Rihann’s Pumas Keep Selling Out.” Accessed May 23, 2016. http://www.teenvogue.com/story/kylie-puma- sales
Hussain, Ali, Mohammed Abbas and Taher Mazar. 2015. “A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment.” International Journal of Business Management and Economic Research 6 (3); 167-177. Accessed May 17, 2016. http://www.ijbmer.com/docs/volumes/vol6issue3/ijbmer2015060302.pdf
Gregory, Lawrence. 2015. “Promotion – Marketing Communication Mix.” Accessed May 17, 2016. http://panmore.com/nike-marketing-communications-mix
Klein, Alyssa. 2014. “Why Fitness is Having a Moment in Fasion.” Accessed May 17, 2016. http://fashionista.com/2014/05/fitness-fashion-trend-2014
Market Watch. 2016a. “Annual Financials for Nike Inc.” Accessed May 10, 2016.

http://www.marketwatch.com/investing/stock/nke/financials

Market Watch. 2016b. “Annual Financials for Adidas AG ADR.” Accessed May 17, 2016. http://www.marketwatch.com/investing/stock/addyy/financials
Meltwater, David. 2015. “Battle of the Brands: Adidas Vs Nike.” Accessed May 23, 2016. https://www.marketingmag.com.au/hubs-c/battle-brands-adidas-versus- nike/
Mylonas, Alissa. 2009. Business Organisation and Management. 3rd ed. Claremont, SY: Macmillian Education Australia.
Nike. 2016. “About Nike”. Accessed May 23, 2016. http://about.nike.com
Parker, Selwyn. 2014. “Nike vs Adidas: A League of their own.” Accessed May 23, 2016. http://www.worldfinance.com/home/a-league-of-their-own-nike-vs- adidas
Pigott, Matt. 2016. “Adidas Strategy.” Accessed May 23, 2016. http://www.incite- group.com/data-and-insights/adidass-strategy-2020-personalization- relationships-and-restructured-data
Repucom. 2015. “Battle of the Brands: Nike vs Adidas.” Accessed May 23, 2016. http://repucom.net/nike-vs-adidas/
Vlasich, Sebastian. 2012. “Adidas – A Global Sports Strategy.” Accessed May 17, 2016. https://wearedevelopment.net/2012/01/11/adidas-a-global-sports- strategy/
Walker, Alice. 2014. “Brand Focus: How Nike Excels on Social Media.” Accessed May 23, 2016. http://www.nukesuite.com/brand-focus-nike-excels-on-social- media/